The World Bank has warned that technology exclusion and trade restrictions stemming from US-China tensions are hurting knowledge production and innovation in both superpowers, posing a long-term threat to growth across Asia.
The deepening divide between the world’s two largest economies now poses the Asia-Pacific’s “most immediate challenge”, according to the bank’s semi-annual economic update for the region, published on Friday.
“Bilateral restrictions on technology flows and cooperation between large countries can reduce the global availability of knowledge,” world bank Empirical evidence has shown “adverse effects of recent restrictions” on Chinese and US companies as well as their top trading partners, he said.
The warning has come US-China relations The countries have sunk to their lowest level since normalizing diplomatic relations in 1979.
Chinese President Xi Jinping has become increasingly assertive over Hong Kong and Taiwan, as well as the South China Sea, and has backed Vladimir Putin despite Russia’s invasion of Ukraine.
In the US, Joe Biden has adopted a much more hawkish policy towards China than his predecessor, including tariffs and Comprehensive export controls Intended to cut off Chinese companies’ access to key technologies such as semiconductors.
In the latest sign of the divide between China and the West, European Commission President Ursula von der Leyen on Thursday called on the E.U. Develop “new defensive equipment”. As part of “de-risking” the bloc’s industries from China’s ambitions to trade in sensitive technologies such as quantum computing and artificial intelligence.
The World Bank’s findings, based on an analysis of patent trends in the United States and China, found that post-2018 measures by Beijing and Washington have hurt corporate innovation in both countries. This threatens to undermine decades of stable economic growth in the Asia-Pacific region as well as cooperation in the fight against climate change, the bank said.
“Once you move away from open, integrated markets governed by predictable trade rules, towards protectionism, trade divisions. [and] Politically influenced choices, you introduce uncertainty, which doesn’t benefit anyone,” said Aditya Mattu, World Bank chief economist for East Asia and the Pacific.
Other countries will struggle to exploit economies of scale if they are to follow suit Conflicting technology standards have been set by various governments, Mattu added.
While a push to diversify manufacturing and technology supply chains away from China initially encouraged India and Southeast Asian countries, the World Bank warned that deeper problems were emerging.
“On the face of it . . . new opportunities have been created. You see a dramatic increase in Vietnam’s exports, especially to the US, and Indonesia’s exports are also increasing dramatically, especially with metals to China,” Mattu said.
But those opportunities could be eroded by further US-China decoupling, which is disrupting trade flows and driving up costs by forcing companies to separate their supply chains to avoid violating export restrictions. Investment may be low due to uncertainty.
Especially in providing it Access to emerging green technologiesAs developing countries in Asia, many of which are deeply dependent on fossil fuels for growth, look to transition to renewable energy.
“We don’t have to do what happened with vaccines,” Mattu said, referring to unequal access to Covid-19 inoculation. “We need to ensure that these green technologies become real public goods.”
The World Bank estimates economic growth in the region of 5.1 percent this year, up from 3.5 percent last year and reflecting a 0.5 percentage point increase from the October forecast.
The bank also said it expects China to do so Achieving 5 percent growth target For 2023, 5.1 percent expansion is forecast as the economy rebounds from Xi’s zero-covid policy.
But its experts have warned that China could face a structural shift to slower growth if it fails to implement economic reforms to shift from reliance on exports and investment to consumption.
Excluding China, the region’s economic growth is projected to slow to 4.9 percent in 2023, from 5.8 percent last year, as slower global growth hits Asia’s export-reliant economies, higher commodity prices eat into domestic consumption and fiscal tightening by policymakers deters investment. . .